Tilted Kilt Pub & Eatery, best known for its scantily clad waitresses, is locked in a legal battle with the company that brokered its franchise agreements in the Chicago area.

In November, Tilted Kilt sued Rolling Meadows-based 1220 LLC, an area developer for Tilted Kilt, for "making unlawful financial performance representations" to potential franchisees and asked the court to rule that it could terminate its agreement with 1220 with cause, in addition to seeking damages, according to the complaint filed in federal court.

On Tuesday, 1220 — a company consisting of four brothers — fired back, filing suit against Tilted Kilt for breach of contract and claiming more than $20 million in damages. The suit alleges that Tilted Kilt abused vendor rebates, failed to develop and implement effective marketing, and made "grossly unreasonable or bad-faith decisions" that affected the franchisees' bottom line, among other claims.

Tilted Kilt is "a company that is completely out of control and is no longer even trying to live up to its contractual duties. … The ongoing and purposeful dereliction of duty by this franchisor knows no bounds," says the complaint filed by 1220.

The Baroud brothers — Robert, Emil, Anthony and Peter — own 1220 LLC. On July 30, 2007, they entered into an area developer agreement with Tilted Kilt, according to the complaint filed Tuesday. Under the agreement, 1220 agreed to sell and develop franchises in northern Illinois, southern Wisconsin and northwest Indiana in return for revenue through various franchise-related fees.

Tilted Kilt alleged that Emil and Robert Baroud met with two prospective franchise owners, Michael Roscioli and Chris Gochis, in 2009 and told them that franchised Tilted Kilt restaurants generated an average revenue of $2.5 million, "which is false," the complaint said.

Roscioli and Gochis entered into an agreement to establish a Tilted Kilt in Kenosha, Wis. Ultimately, the Kenosha location "sustained significant losses rather than the profits Baroud projected," the lawsuit said. Roscioli and Gochis also entered into franchisee agreements for locations in Vernon Hills and Gurnee. All three locations have since closed.

In its countersuit, 1220 alleges a litany of ways in which Tilted Kilt failed to meet its contractual obligations. It also alleges that Tilted Kilt "has schemed for years to find a way to terminate 1220" as an area developer because Tilted Kilt "has coveted for itself" 1220's revenue stream.

A version of this article appeared in print on January 22, 2016, in the Business section of the Chicago Tribune with the headline "Tilted Kilt `completely out of control,' developer's suit claims" —
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